93% of the veterans in the United States opt for a VA loan to buy their dream home. That is because the requirements for a VA loan credit score are lenient.
Moreover, a traditional mortgage requires a hefty down payment of 20% and a credit score of 620 or above. But, a VA loan allows you to get a mortgage with no down payment and a credit score as low as 580.
The current interest rates and down payment requirements make a VA loan a perfect choice for you. Therefore, get a mortgage pre-approval to determine your loan amount. Start here!
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New Home Purchase
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Mortgage Refinance
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Cash-out Refinance
What Credit Score Do You Need for a VA Loan?
620 is the ideal credit score needed for a VA home loan. However, some lenders might require scores as low as 580. A good credit score can save you thousands over the life of your loan. Here’s a breakdown of potential interest rates based on your credit score:
- 630 credit score or lower: Higher interest rates (around 7.89%)
- 640 credit score or higher: Moderate interest rates (around 7.5%)
- 680 credit score or higher: Lower interest rates (around 7%)
These are just averages, and specific rates will vary depending on your lender, types of loan, and other factors.
Can Someone With Bad Credit Get a VA Loan?
Yes, someone with bad credit can still get a VA loan. Some lenders might require credit scores below 580. Here’s what you need to get a VA loan with a bad credit score:
- Eligibility: Military service history, stable employment, and a manageable debt-to-income ratio can improve your chances of approval despite a lower credit score.
- VA Loan Lenders: These lenders understand your financial situation and may be more flexible with credit score requirements.
Each lender has different requirements and offers. Always shop around and chose the best lenders nearby to get a suitable deal.
How to Qualify for a VA Loan?
To qualify, you must meet specific service requirements:
- Veterans need at least 90 days of wartime service or 181 days of peacetime service.
- National Guard and Reserve members need six years of service to qualify for a VA loan.
- Surviving Spouses can qualify for a VA loan if their spouse died in service or from a service-related disability.
What Benefits Come With a VA Loan?
VA loans are better as compared to conventional loans. Here’s how you can benefit:
- No down payment required: You don’t require a hefty down payment. This can help you save for other expenses.
- Competitive interest rates: VA loans typically offer lower rates than conventional loans. You get lower monthly payments.
- No private mortgage insurance (PMI): Generally, a lower down payment requires private mortgage insurance. However, with a VA loan, you don’t need any insurance.
- More lenient underwriting guidelines: Qualifying for a VA loan can be easier than for other loans. You don’t have to provide enough collateral.
- Limited closing costs: Closing costs on a VA loan are limited. Your lender won’t ask for a higher closing.
Bottom Line
VA loans are sure to secure your American dream of homeownership. They make homeownership accessible with flexible credit requirements and no down payment. Well, securing a VA loan with a higher credit score can open up better opportunities.
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Frequently Asked Questions
What is the minimum credit score for a VA loan
The minimum credit score for VA loan is 620. However, some lenders might also accept a lower credit score of 540 or 520. Note that a lower credit score may lead to higher interest rates.
Can I get a VA loan with a 580 credit score?
Yes, it is possible to get a VA loan with a 580 credit score. However, your lender may check your qualifications like, military service history, stable employment, and manageable debt-to-income ratio.
Does credit score affect VA loan interest rate?
Yes, credit score has a direct effect on the interest rate. If you have a lower credit score of 580 or lower, your interest rate would be around 7.9%. A higher credit score above 680 can give you interest rates of around 7%.
